Dragons were created by Morgoth in the First Age. He made three different types of Dragons, the Urulóki, the winged dragons, and the cold-drakes. Urulóki were dragons such as Glaurung, who could breathe fire, but could not fly. Winged dragons could both breathe fire and fly, and cold-drakes seemed to have been able to fly, but not breathe fire.
By the end of the Third Age, most dragons lived in the far north, in a part of a chain of moiuntains known as the Withered Heath. In 2770, Smaug set forth and took the Lonely Mountain, Erebor, but was slain in 2941.